How Lenders Structure a $1 Million Position in Costa Rica

Lenders who are considering a larger commitment to Costa Rica usually ask the same practical question: what does a one million dollar position actually look like? Not the headline number, but the structure underneath it. How many files, what rate, what term, and what work is involved in holding it.

What follows describes how most lenders working with GAP prefer to structure larger positions. These are industry norms rather than rules. You set your own terms, and nothing here is a promise of any particular outcome.

Start with the arithmetic, then set it aside

Private lending rates in Costa Rica generally run between 9% and 16% per year, with terms from six months to three years. Applied to a one million dollar position, that range describes a wide band of gross annual interest, and it is worth being blunt about what the arithmetic does and does not tell you. A rate of 12% on a fully deployed million produces roughly ten thousand dollars a month in gross interest. That is simple multiplication, not a forecast.

Real positions differ from the arithmetic in three ways. Capital is rarely deployed all at once. Loans mature and need to be redeployed, which creates idle periods. And gross interest is not net return: costs, taxes in your own jurisdiction, and the possibility of a borrower who does not perform all sit between the two. Treat the calculation as a way of comparing files, not as an expected result.

One file or several?

A million dollars can go into a single loan or be spread across several. Both are common, and the choice usually comes down to how a lender thinks about concentration.

A single larger file

One loan means one property to review, one borrower relationship, one set of documents, and one exit to track. It is the simplest position to hold. It also means the outcome of the whole commitment rests on one property and one borrower.

Several smaller files

Splitting the same capital across three or four loans spreads exposure over different properties, regions, borrowers, and maturity dates. Staggered maturities also mean capital comes back at intervals rather than all at once, which makes redeployment easier to manage. The trade-off is more files to review and more moving parts.

Many lenders at this size do a mix: one anchor file plus two or three smaller positions. Our current lending opportunities page shows the kind of loan sizes that come through in practice.

Rate is a description of the file, not a target

At this size the temptation to chase the top of the range is strongest, and it is worth resisting. A 16% file is priced there because something about it requires the lender to carry more uncertainty: a harder property to sell, a thinner equity cushion, a shorter or less certain exit. A 9% file usually has the strong location, the conservative loan to value, and clean registered title.

For a position you intend to hold and redeploy over years, the quality of the collateral tends to matter more than the difference between two rates. Plenty of experienced lenders deliberately build around the lower end of the range for exactly that reason.

There is also a deal-flow argument at this size. GAP advertises lending from 9% and up, and that number is what brings borrowers with good properties to the door. A lender willing to place a few files at 9% sees far more opportunities than one who waits for 16%, and after GAP studies the property, location, loan to value and exit, a file offered at 9% may well come back at 12% anyway. Over time most lenders end up with a mix: some at 9%, more around 12%, occasionally one at 16% where the file calls for it. For a position of this size, steady deployment usually matters more than the last two points of rate.

What holding the position involves

Once a file is funded, the ongoing work is mostly administrative: payments collected and passed through, insurance and municipal standing monitored, and the maturity date managed well before it arrives. GAP handles the property review, documentation and closing; you receive the file, decide whether to participate, and set your conditions. After closing the borrower pays you directly, and GAP stays available if anything comes up. The page on how lending with GAP works sets out each step.

Before committing capital at this level, take independent legal and tax advice in your own country of residence. Cross-border interest income and Costa Rican withholding treatment are worth understanding in advance rather than at year end.

Frequently asked questions

Is a fixed monthly figure guaranteed?

No. Interest accrues according to the terms of each individual loan, and no return, timeline, or outcome is guaranteed. Borrowers can fall behind, and loans can require enforcement.

How long is capital committed?

Most files run six months to three years. If you need shorter duration, say so and files will be matched accordingly.

Can I lend less than a million?

Yes. Positions of many sizes are common; the structural questions in this article apply the same way at smaller amounts.

Who decides the terms?

You do. GAP presents files and recommends structures based on experience, but the lender sets the rate, term, and conditions, and can decline any file for any reason.

Talk through a structure

If you are weighing a larger commitment and want to see how the files would actually be built, contact GAP Investments and we will walk through current opportunities and how they might be structured. Every opportunity is subject to your own independent review, and no return is guaranteed.

This article is for general information only and is not investment, legal, or tax advice. All lending and investment decisions should be made based on independent due diligence and with qualified professional guidance.

Article by Glenn Tellier (Founder of CRIE and Grupo Gap)